Understanding the Closing Process
Home Owners |
Welcome back, friends!
Today, we’re diving into the details of the Contract to Close process. Most all firms will function the same way, with variations here and there, but this is a good, general overview of what we do from the beginning to the end of each transaction. We highly recommend sharing this post with your clients upon going under contract, so they understand who we are and what our job is. (The following steps apply to a transaction where the buyer is obtaining a loan.)
1. We receive the full, binding contract from the agent.
*Agents: Please don’t rely on the Lender to send the contract. Although it typically comes with the title order, there are never any guarantees and we’d rather get the same contract multiple times than receive it late in the process because one person thought someone else was sending it.
2. A file is opened and the contract is assigned to a Pre-Closer and a Closer team.
3. The assigned Pre-closer will follow up with the agent during or after the due diligence period to check on the status of the loan, inspection and appraisal (if back) to see if the file is moving forward before ordering title.
4. Assuming the contract is moving forward, a title exam is run on the property.
*A title exam is a search performed that evaluates all of the public records that affect the title to the real estate being purchased. Prior deeds are examined to confirm the title can be passed properly to the new owner. In transactions that include a will, trust or divorce, the appropriate party in the transaction needs to inform our firm, so those agreements can be pulled and examined as well.
5. Links to the Buyer and Seller information forms are emailed to the clients respectively to complete in their entirety and return in a timely manner. Upon receipt of the Buyer form, our wiring instructions are sent securely for the Buyer to use to wire their funds for closing.
*The information provided on those forms allow the Pre-Closers to order payoffs, the HOA closing letter, water bills, etc., so getting the forms back from your clients ASAP is imperative! They also contain important information regarding the closing that both the Buyer and the Seller need to know prior to closing.
6. The title is received from the Title Examiner. It’s reviewed, cleared, if needed, and a title commitment is sent to the Lender, so the file can be submitted to underwriting.
7. The agent should make sure all of the contract exhibits and amendments as well as the commission agreement are sent to us as soon as they’re signed. If the agent plans to use a Disbursement Authorization (DA), this is a good time to send it to us as well.
8. Once the payoffs, HOA closing letter, water bill, home warranty invoice, termite information, etc. are received, the file is transferred to the assigned Closer to work up a Preliminary Closing Disclosure (CD) to send to the Lender. The Closer will continue to work with the Lender to get an approved CD.
9. Once the Buyer receives the CD from the Lender (no less than 3 days prior to closing), he/she will use the wiring instructions they received from us to initiate the wire with the funds to close.
10. Everyone comes to closing at the scheduled date and time, closes the transaction and CELEBRATES! We hope this clarifies some questions you may have had about the process from beginning to end. Every closing is different and may include some additional work or adjustments to the processing, but this is how the file is handled by our firm, in a nutshell. If you have any specific questions, please send us an email at firstname.lastname@example.org and we will be happy to assist in any way we can! We look forward to working with you on your next closing!
Written by Megan Blanks, Marketing Director at McManamy McLeod Heller.
For informational purposes only. Not to be relied upon as legal advice. Nothing in this blog should be construed as creating an attorney-client relationship. MMH is not responsible for, does not endorse or accept liability for any externally linked site or its content. MMH does not give any representation regarding the safety, reliability or accuracy of the content or materials contained on any external website.